From: prout-gems-subscribe@pi.org.au 
  
 What's Wrong with Economics and how can it be Fixed 
  
 Traditionally economics is the study of how scarce resources are or should 
 be allocated. In particular, it has involved themes such as choices, 
 trade-offs, markets, prices, information, needs, behaviour, satisfaction, 
 business, government, growth and poverty, and more recently the environment 
 and sustainability. Conventional economics focuses mostly on the following 
 themes: 
  
 € Choices and opportunity costs 
  
 € Power of the market 
  
 € Making decisions at the margin 
  
 € Distribution of income and wealth 
  
 € Private choices vs public choices 
  
 € Risk and uncertainty 
  
 This demonstrates that most economists today only understand something of 
 the principles of general economy and something of commercial economy. The 
 inequitable distribution of wealth and resources seen in the world today 
 must demonstrate that even these parts are still in an undeveloped state. 
 The study of people's economy and psycho-economy are totally unknown to 
 modern economists, and as such find no place in the present mode of economic 
 thinking. 
  
 A brief outline of what conventional economists focus on is given below. The 
 potential scope of what could be considered under these heading is also 
 discussed, should economists seek to broaden their worldview. Immediately 
 one can see that the scope of what is presently considered in economics is 
 very limited, although it certainly is fundamental to economics. However, 
 the application of a narrow outlook has had diabolical impacts on many 
 cultures and people of the world. To remedy this shortcoming economics needs 
 to find a set of foundation principles that are universal in character and 
 allow economics to be applied for the happiness and all-round welfare of all 
 of society's members. 
  
 € Choices and opportunity costs 
  
 In conventional economics, choices and trade-offs are thrust to the centre 
 of analysis. Associated with all choices are trade-offs. It is true that 
 trade-offs involve considering and choosing between alternatives in 
 producing goods and services, in marketing, in investment and savings, in 
 economic management and in the consumption of goods and services. 
  
 However, it is not the case that people have a real option to consider 
 between alternatives. Where there is no economic democracy, the potential 
 opportunities (or opportunity cost of what is forgone by a limited choice) 
 cannot bear fruition and cannot be known or ascertained. Generally, in 
 economics, the opportunity cost of any option is the amount of other goods 
 and services which could have been obtained instead of any particular good 
 or service. Practically, it is the benefits foregone from an alternative. 
  
 Capitalism, being materialistically oriented, prevents and creates 
 hindrances for people understanding subtle aspects of life. As capitalism 
 focuses only on material increases in living as determined by how much 
 individuals can accumulate (given that capitalism is concerned with private 
 property and private enterprise), society will miss out on, or forego, 
 maximum utilization of metaphysical and spiritual potentialities or these 
 will take on a degraded meaning for further material accumulation and 
 exploitation. In this regard there will also be loss of physical 
 potentialities. Many choices are being made unavailable to the people as a 
 result. 
  
 € Power of the market 
  
 A market is supposed to help coordinate decisions and act to allocate goods 
 and services amongst buyers. Efficient markets are supposed to convey 
 information and send signals to producers, traders and consumers. Today, 
 markets pervade every person's life on this planet. Historically, many 
 markets were established through colonial exploitation in which exploiters 
 first captured a new market area and then gained control of all the raw 
 materials available in that area through monopoly rights. They then exported 
 raw materials and produced finished goods out of the raw materials in their 
 own factories at home within their own region, only to sell the finished 
 goods back to the people in the occupied market. Accordingly, this 
 exploitation results in getting double opportunities to misappropriate 
 wealth - the exploiters deceive the local population while procuring their 
 raw materials at cheap rates, and then they sell their finished products in 
 the same markets at exorbitant prices. 
  
 The affects of such colonialism has never been properly or fully addressed 
 for indigenous cultures around the world and in those countries where 
 attempts at recompense, rectification or reconciliation have been made, it 
 has largely resulted in thrusting the indigenous cultures into the 
 capitalist market place in which limited social and cultural choices are 
 available. By capturing the local market, colonial exploiters succeeded in 
 totally destroying the local industrial system. This legacy persists today 
 and as a consequence many local economies have not been able to develop 
 wholistically or self-sufficiently. The only development open to them is to 
 export their raw materials and, in any case, this is all controlled, managed 
 and owned by multinational corporations who, in essence, adopt the same 
 approach as the colonial exploiters. Often, these raw materials will be 
 exported to other countries in which indigenous cultures have also suffered 
 and as a result of which there are cheap and easily exploited labour forces. 
  
 Essentially, today the players in market places are powerful corporations. 
 Such markets lack proper equipoise and equilibrium with the social and 
 cultural needs of the people, let alone people's needs in many areas of the 
 world for basic minimum necessities (eg, food, clothing, medical treatment, 
 housing and education). To obtain equipoise and equilibrium at the physical 
 level requires that markets be incorporated as part of local or block level 
 or regional planning in a decentralized economic democracy. 
  
 Demand and supply are important factors in the functioning of markets. 
 Proper planning requires that the physical demand of the day and physical 
 demands of the foreseeable future are to be assessed and organised. As well, 
 the physical supply of the day and the physical supply of the foreseeable 
 future are to be organised and ensured. The demand function relates to 
 people's purchasing power (or consumer income), price level and prices of 
 other goods, family circumstances and natural conditions such as weather 
 conditions. The supply function or factors which determine level of supply 
 relates to price of goods, cost of labour, prices of other services and 
 intermediate products required for production of goods, the number of firms 
 engaged in producing a product, and levels of capital equipment or 
  
 [continued in next message] 
  
 --- SoupGate-Win32 v1.05 
  * Origin: you cannot sedate... all the things you hate (1:229/2)